SJ-R gets a sour Apple from GateHouse

While employees at the State Journal-Register fear for their jobs, brass at GateHouse Media, the daily newspaper’s parent company, has announced a turnaround plan for a corporation that has shown precious little profitability.

In a Sept. 12 email to all employees, GateHouse CEO Michael Reed unveiled Project Apple, an initiative named for the Silicon Valley computer company.

“We are not looking to dominate the world,” Reed wrote. “But, we are looking to remain the most dominant local media franchise in each of the markets we serve and a turnaround just as impressive as Apple’s is something to which we should all aspire.”

Aside from saying that the company has retained a consultant, the memo is long on buzzwords like “structural cost alignment” and “digital ecosystem” but short on specifics. It arrived in employee email accounts the same day that three people, including two in the newsroom, lost their jobs at the State Journal-Register. One was a production employee, the other put together the paper’s Be Healthy Springfield web page and the third was a clerk who also wrote for the paper’s Our Towns section.

Since July, at least three other GateHouse-owned newspapers in Illinois have reduced newsroom staff. At the Rockford Register-Star, 19 employees, including 13 in the newsroom, were laid off in July, according to the newspaper and Paper Cuts, a website that chronicles the shrinking of the nation’s newspaper industry. In Galesburg, the GateHouse-owned Register-Mail this month announced that it had laid off two reporters and transferred an online editor out of the newsroom. The Journal-Standard in Freeport announced four layoffs in July, including three in the newsroom.

During a recent newsroom meeting held the day that pink slips went out, State Journal-Register publisher Walt Lafferty could not guarantee that jobs are safe in Springfield, according to employees who were at the meeting but who insisted on anonymity for fear of getting fired.

“We asked if there were going to be more layoffs,” one employee recalled. “He said, ‘Well, that’s all there are for today.’ Nobody can ever feel secure.”

Lafferty could not be reached for comment. Executive editor Jon K. Broadbooks said that he could not comment.

Lafferty also said that Sunday circulation has dipped below 50,000, which he blamed on a price hike from $1.75 to $3 for single copies. An employee who was at the meeting said the drop was as much as 4,000 newspapers.

“This is kind of a new psychological barrier that’s been broken, to go below 50,000,” the employee said. “I think it’s a blow.”

More change could be afoot. Lafferty and Broadbooks during an August newsroom meeting said that GateHouse is working with a company called Journatic, which has offices in Chicago and St. Louis and has been advertising online for work-from-home page designers for $24,000 a year.

“Our focus is on creating meaningful, engaging content – for ourselves and for our partners – that results in audience growth, cost-savings, and sustainable new advertising/revenue models,” the company says on its website.

Just what Journatic might do for the State Journal-Register isn’t clear.

One employee said that the plan seems fluid, but the general idea is for the company to rewrite press releases and package information specific to communities such as Taylorville and Chatham.

Despite turmoil, the staff at the State Journal-Register is putting out quality work, judging by GateHouse’s annual journalism contest. Columnist Dave Bakke was named best columnist in the chain and sports writer Todd Engle won sportswriter of the year. The paper as a whole was a finalist for newspaper of the year while Tamara Browning was a finalist for best features writer, Dean Olsen was a finalist for best news writer and Dave Kane and Marcia Martinez were both finalists for best sportswriter.

The State Journal-Register is profitable as a stand-alone enterprise, according to what Lafferty has told employees in past newsroom meetings. However the parent company, GateHouse, has more than $1 billion in debt coming due in 2014 and has never had a profitable year since becoming a publicly traded company in 2006.

Engle, the award-winning sportswriter, announced his resignation last week. He’s leaving journalism to take a job with a uniform manufacturing company in Kansas City, where he grew up. He said he’ll miss working in a newsroom, but job stability and money drove his decision.

“This offer came along, and I just couldn’t pass it up,” Engle said. “It really hasn’t sunk in yet.”Bruce Rushton, Illinois Times staff writer, is a former State Journal-Register employee.

Comments

Old Comments

The SJ-R is a purveyor of junk "news" and gets its information by and large from news companies that collect from information, rather than from real reporters like Rushton who actually investigate. Media conglomerates care about the bottom line but they forgot why newspapers exist in the first place: to report news. News is not sitting in front of government hacks who tell you what the news is. News isn't riding along with the military to military approved places to military approved things in a war. But that is what the SJ-R feeds us. They do cover SOME local news, but again, they go to council meetings and duly report what goes on, without any time or staff devoted to getting behind it. What's left of the staff has no time to look behind the stories and really investigate much of anything. And for local news? Where is the courthouse reporting?

Poor SJ-R. Poor Springfield. THank goodness for the IT!

09.30.2011 at 07:42

What this company really needs, is a Dave Ramsey style turn-a-round, not a Steve Jobs turn-a-round.

From it's infancy, this company went on the hook in a BIG way to grow and get big, fast. If I am correct, GHM took on a BILLION dollars of long term debt due in 2014. It has managed to take care of it's short term debt obligations, but has grim road to travel in terms of the long term debt. The original business plan assumed indefinite, perfect sailing conditions out on the open ocean of life. The boat was not rigged or designed to weather a severe economic storm. As Dave Ramsey says, "all good things come to an end! GHM now has to navigate stormy economic waters.

The result? Much pain and suffering for the employees. The company cuts - and cuts - and cuts - and continues to cut to keep itself alive.
Had a more conservative financial approach been taken - had leaders "Dave Ramsied" the thing, much of this pain could have been avoided.

Based on daily stock price, the market cap (worth) of this company is about 3.4 to 5.8 million. This will make it very hard for the company to negotiate debt and borrow money. Last year, the company cash flowed something like 1.48 million. The corporate officers raked in bonuses on top of their hefty compensation packages of about that same amount. This was approved by the corporate Board of Directors, even though the compan is pink sheeted on the New York Stock Exchange. I can't figure that one out. It just doesn't seem fair to the shareholders to pay out bonsues like that.

Even if a deal can be cut to pay 10 cents on the dollar on the BILLION dollars of long term debt, it seems mathematically implausible that the company will be able to handle the long term debt.

Advertising revenue generated through electronic media represents only a tiny, tiny portion of GHM's overall revenue. The support staff for the traditional print side is being cut so fast, it is in danger of collapsing. It is also doubtful that the company will be able to grow it's online revenue fast enough to replace what is going away from the print side.

GHM my live on till the long term debt comes due, but it will be an exhausting excercise; much like peforming CPR on patient that has almost no chance of living. Somebody should enroll these people in Dave Ramsey's Financial Peace Unviersity.